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Status of Federal Budget Implementation: Zero progress in 36 economic sector programs announced in federal budget

Status of Federal Budget Implementation: Zero progress in 36 economic sector programs announced in federal budget
The implementation of the programs announced by the government in the federal budget has always remained sluggish in Nepal. A study by the Confederation of Nepalese Industries (CNI) shows that in the first seven months of the current year, there has been no progress in 57 percent of the economic sector programs announced in the budget for the current fiscal year. The study highlights there is no satisfactory progress in most of the policies and programs that are directly related to the economic sectors. In its 'CNI Budget Watch' initiative, CNI has identified 63 points related to the economic development of the country, investment, and the private sector. According to the study, the progress of 36 of those points has been zero. As per report, about 48 percent of the points suggested by the CNI for the budget of the current fiscal have been included in the annual policy and program (budget) of the government. However, the implementation side is far from satisfactory.

The 'CNI Budget Watch' has included eight sectors, namely new entrepreneurship, innovation and information technology, tourism, industry, small and medium industries, investment, energy, infrastructure and agriculture, domestic production, and export promotion.

The CNI study says, of the 63 points related to economic sectors, only nine points (14.28 percent) have been fully implemented by the government agencies till mid-February. Among those are the policy of a minimum threshold of Rs 20m in foreign direct investment, arrangements of automatic approval of investments up to Rs 100m, 10 percent share reservation in the initial public offering (IPO) of companies for Nepalis in foreign employment, and initial approval of large foreign investments through electronic means within seven days. Similarly, the study shows 28.57 percent (18 points) were partially implemented. However, the remaining 57.14 percent (36 points) of policies and programs have no progress at all. "The ineffective implementation of the budget has not only hit the government revenue collection but an uncomfortable liquidity situation and the contraction in demand has also discouraged the private sector from new investments," states CNI. Most of the policies and programs announced in the budget related to the industry, land, infrastructure, foreign direct investment, and public-private-partnership which are important for economic development, have made no progress. "81.48 percent of the 27 important announcements of the federal budget related to these areas have not yet been implemented," said the study. Similarly, there has been no progress in the announcement such as the construction and operation of the industrial areas in potential areas including Shaktikhor in Chitwan in public-private-partnership, reviewing the provisions regarding the delimitation of land required for the establishment of industries, arranging the land lease for 50 years for industries, and mortgaging of land in excess of the limit in the name of industrial businesses to take loans. Budget announcements related to improving laws and procedures related to foreign investment to bring in investment from non-resident Nepalis, granting permission to Nepali construction professionals to do construction business abroad, raising resources for infrastructure development by issuing green bonds, making arrangements for the construction of the Mirchaiya-Lukla-Sagarmatha Expressway with private sector investment are also yet to see implementation. Status of Budgetary Programs' Implementation

Fully Implemented 15.6 percent
Partially Implemented 28.1 percent
Not Implemented 56.3 percent
  Sector-wise Implementation Status
Sector Total Zero Implementation Partial Implementation Full Implementation
Startup 5 0 5 0
Information Technology 4 0 3 1
Tourism 8 4 3 1
Industry, SMEs 9 6 2 1
Land 3 3 0 0
Foreign Investment 8 4 0 4
PPP 2 2 0 0
Energy 4 2 1 1
Infrastructure 10 7 3 0
Agriculture 3 3 0 0
Domestic Product and Export Promotion 4 2 1 1
Others 3 3 0 0
Total 63 36 18 9